Life insurance sales up but Gen Xers not the ones buying

By Beth Orenstein

Beth Orenstein is a freelance writer from Northampton, Pa. A graduate of Tufts University, she covers health topics.

According to LIMRA, every life insurance product line has seen positive growth so far this year.

While sales may be up, it's not Gen Xers who are buying.

That's according to a survey commissioned by New York Life Insurance Co.

The survey found that fewer than 20 percent of Gen Xers have the life insurance coverage they believe they need.

To conduct the survey, The Futures Co., an independent third-party research company, asked about 1,000 Americans age 25 and over with dependents and household incomes of at least $50,000 how much life insurance they had in place and what they wanted their policy to cover should the family breadwinner die unexpectedly.

New York life compared those results to a similar telephone survey of about 1,000 Americans of the same demographic conducted by the independent research firm Greenwald & Associates in 2008.

Gap between needs and haves widens

In the recent online survey, Gen Xers reported a median shortfall between their life insurance coverage and their self-described financial needs of $448,996. In 2008, the difference was $362,688. Those numbers show the gap or chasm between the insurance they have and their potential needs increased 24 percent in the last five years.

Another key finding: Less than one in five (19 percent) of respondents said they have enough life insurance to cover everything they expect their insurance to pay for.

In a press release on the survey, J. Walker Smith, executive chairman, of The Futures Co., says the study has value because it's not the life insurance industry telling people they need more coverage. By asking people what they want ilife insurance to cover and comparing that to the coverage they have in place "it shows ... consumers themselves are saying they need [more coverage]."

How they would use life insurance

The participants were asked about ways they planned to use their families' life insurance coverage if needed. Options included replacing the breadwinner's income to covering retirement and college expenses.

Other generations that were surveyed also reported a gap between what they believed they need and what they have bought. However, the gaps weren't as wide. The gap for Gen Xers was 40 percent greater than the median gap for all Americans. The gap for millennials was $370,744 and for boomers was $267,016, according to most recent survey.

The 2013 survey was conducted from April 24 to May 1 and about evenly split between men and women. Participants also had to have sole or shared household financial decision making power.

LIMRA reports growth

According to LIMRA, individual life premium grew 4 percent in the second quarter of the year. Overall, individual life premium is up 6 percent so far this year.

But indexed universal life and whole life products were the biggest drivers of overall growth in the first half of 2013, Ashley Durham, senior analyst for LIMRA Insurance Research, said in a release about the premium growth.